RELOCATION BLOG
Do You Have to Pay Tax?
When renting a residential property in the UK, the tenant must pay Stamp Duty Land Tax (SDLT) if the rent is over a certain rental amount in England and Northern Ireland, Land and Buildings Transaction Tax (LBTT) in Scotland, or Land Transaction Tax (LTT) in Wales (as of 1st April 2018).
The value thresholds are £125,000 in England and Northern Ireland, £145,000 in Scotland, and £180,000 in Wales (as of 1st April 2018).
Are you relocating employees to the UK? Here we try to make the subject of relocation taxation a little clearer for you to understand.
If your organisation is considering relocating an employee to the UK or is already contributing towards employee relocation costs, the organisation will incur certain tax, National Insurance and reporting obligations, so you need to be aware of which relocation costs incur tax and what needs to be reported to HMRC.
The Government adverts tell us that "tax needn't be taxing". Well it is and UK domestic employee relocation costs are no exception. The subject of tax is almost as confusing as the British electorate but here we will try to make the subject a little clearer to understand.
If your organisation contributes towards employee relocation costs, the organisation has certain tax, National Insurance and reporting obligations, so you need to be aware of which relocation costs incur tax and what needs to be reported to HMRC. In terms of the technicalities of reporting, you can very happily leave that to your accounts department to deal with.
The Scottish rate of Income Tax (SRIT), introduced by the Scotland Act 2012, gives the Scottish Parliament the power to set a Scottish rate of income tax and to raise taxes on land transactions. The SRIT will be charged on the non-savings and non-dividend income of those defined as Scottish taxpayers and will start from April 2016.
How much does a full domestic relocation programme cost per employee? It depends on a number of factors, right? However, without knowing what those variables are, you can bet your bottom dollar / pound / euro * (* delete as appropriate) it's going to cost considerably more than £8,000, even without a Guaranteed Sale Price provision.
Your UK Limited company has ventured out to the Wild West to do business and you quickly find a US bank account is required. The idea of opening a US account seems alluring when you think of the potential business that 400 million consumers can bring. So you jump on the band wagon and file a Form SS-4 to sign up for a US tax identification number, referred to as EIN (employer identification number).
Then it dawns on you: “What did I just do? Is my company now in the Internal Revenue Services (IRS) system?”
Short answer: YES.
With effect from 6 April 2015, a new capital gains tax charge has been introduced which is aimed at UK non-residents disposing of UK residential property; it specifically applies to non-resident individuals, certain companies and trustees.
The amount of capital gains tax payable on disposal of UK residential property is based on the proportion of the gain arising after 5 April 2015, calculated using time apportionment or "re-basing".
If you are non-UK resident and you own UK residential property, it is prudent to obtain a valuation of your property as close to April 2015 as possible, as this will give you flexibility on a future disposal of the property.
Where a capital gains tax charge applies, the rates of tax are the standard rates applying, i.e.
For individuals making a disposal, it may be possible to claim principal private residence relief (PPR) providing the requirements of HMRC’s occupancy test can be satisfied. This requires the owner/co-owner to have occupied the property for a minimum of 90 individual nights.
Alternatively, where a disposal is by a company, ATED charges will apply in preference to these charges.
These rules are particularly complex because they interact with the statutory residence test which was introduced with effect from 6 April 2013.
Note that any losses made on disposal can be offset against gains made on the disposal of other properties. If you subsequently become resident in the UK, ring-fenced losses from an earlier period of non-UK residence will be available to offset as general losses against other chargeable gains.
Rebasing (whereby the tax payable is based on gains for the period after 6th April 2015) is not available to individuals who purchase UK property whilst they are non-UK resident and subsequently sell the property once they become resident in the UK.
If you are considering a UK property disposal at a time when you are non-UK resident, or you are considering returning to the UK and will wish to dispose of UK property, we recommend you take advice as the correct timing can reduce your liabilities.
If you would like to discuss any aspect of property tax, please get in touch with us using our contact page.
Source: http://rjp.co.uk/2015/05/21/non-residents-with-uk-property-should-seek-advice-to-minimise-new-cgt-charges/ (Lesley Stalker, RJP Accountants & Tax Advisors)
For those individuals who also wish to reside in Portugal, a special tax regime for non-habitual residents may apply, which may lead to a more beneficial tax burden.
Foreign income obtained by Non-Habitual Residents in Portugal is exempt from taxation in the following cases:
In the case of pensioners and retired people when:
In the case of income derived from employment, when:
In the case of income from self-employment (through the provision of services of a high added value, of a scientific, artistic or technical nature, or through intellectual or industrial property, investment income, rental income, capital gains income or other increases in equity), when:
Source: Living in Portugal
